By Brendan Smialowski JJ Kinahan Senior Contributor
Elon Musk renewed his objections to President Trump’s One, Big, Beautiful Bill. (Photo by Brendan … More Smialowski / AFP) (Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)
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Key Takeaways
Small caps lead weekly gains, Russell 2000 jumps 3.5%
Jobs report shows strength, but private sector lags behind
Markets calm despite tariff uncertainty and Elon Musk drama
Despite the abbreviated trading week, stocks posted decent gains. Small cap stocks led the way with the Russell 2000 gaining 3.5%. That was followed by the Dow Jones Industrial Average, up 2.3%. The S&P 500 and Nasdaq Composite were up 1.7% and 1.6%, respectively.
On Thursday, the Bureau of Labor Statistics released June’s report on employment. The headline numbers of 147 thousand new jobs and an unemployment rate of 4.1% were both better than forecast. However, a slight dig beneath the surface reveals a couple concerning aspects. First, the jobs created were heavily concentrated in government jobs. Ideally, we’d see the jobs being created in the private sector. Second, while the unemployment rate ticked down, that was due to a drop in people who are unemployed that are actively seeking employment. The unemployment figure only accounts for people who are not working and are actively looking for work. Therefore, while the numbers were still positive on the top line, they didn’t reflect the strength I’d like to see.
It’s going to be a relatively quiet week both in terms of economic data and earnings. On the earnings calendar, the only company of note that is scheduled to report is Delta Airlines. Then on the economic calendar, we’ll get the minutes from the latest FOMC meeting on Wednesday and there is a 10-year note and 30-year bond auction scheduled for later this week. The week’s biggest news will likely be tariffs, as extensions are scheduled to end this week.
Over the weekend, President Trump said starting today, he will be sending letters to countries letting them know what their respective tariff rates will be. Those rates could be anywhere from 10 – 70%. However, when speaking to reporters last week, he said those tariffs may get pushed back until August 1st. This leaves a bit of uncertainty as to where trade policy will ultimately land. What I find most interesting about this is that the market seems to have reached a place where it’s less concerned.
In premarket, the VIX is around 17.5. While that is right around its historical average, it is far below the levels we saw back in April when the tariffs were first announced. To me, this suggests less anticipation of volatility with respect to tariffs and overall trade policy. Although this can quickly change, for now at least, it looks like everyone has reached a place of resolution vis-a-vis tariffs.
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The other big story making news this morning is Elon Musk. Last week, Musk renewed his objection to President Trump’s One, Big, Beautiful Bill, going so far as to start his own political party. It was Elon’s involvement in politics that had some investors concerned where his attention was being focused, prompting Elon to leave Washington and return to Tesla. In premarket, shares of Tesla are lower by 6.5%.
For today and this week, the lack of big news on the calendar is worth mentioning. These are the types of weeks that can lull you to sleep. The week after a holiday with no major events scheduled can be times when something unexpected happens. If this year has taught us anything, it’s that the unexpected is possible. As always, I would stick with your investing plans and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.
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